Brexit Bill Clears UK’s Lower House Hurdle
British Prime Minister, Theresa May is now one step closer to triggering Brexit as the UK’s House of Commons cleared May's Brexit bill that allows the UK government to initiate formal talks to exit the European Union (EU). From the British economic calendar today, the Royal Institution of Chartered Surveyors’ (RICS) house price balance surprisingly advanced in January. Further ahead in the day, the Bank of England (BoE) Governor, Mark Carney is scheduled to deliver a speech in London.
In the Eurozone, German trade surplus narrowed for December. Later today, US weekly jobless claims along with speeches from 2 Federal Reserve (Fed) officials are likely to grab attention. Meanwhile, headlines from Washington will continue to dictate market sentiment as traders look for further details on the US President, Donald Trump’s campaign promises.
Pound Sterling – UK Markets
The House of Commons have overwhelmingly granted the British Prime Minister, Theresa May, the power to trigger the start of Britain’s divorce talks from the EU. Now that the legislation has been approved by the House of Commons, it will be put before the House of Lords for a final decision later this month. The House of Lords have two options before them: Either approve the bill after several readings and debates and pass it on for royal assent to be signed into law or make amendments and send the bill back to the House of Commons for further debate and votes. Once the legislation is passed by both houses, Ms. May will be able to trigger Article 50 of the Lisbon Treaty.
On the data front, a monthly survey published by RICS showed that UK’s house price balance unexpectedly rose in January, after slowing in December. Looking ahead, the BoE Governor, Mark Carney is scheduled to speak at the BoE inclusion reception in London later today.
US Dollar – US Markets
The US Dollar has extended its previous session losses against the Euro and Sterling this morning. Ahead in the day, the US Department of Labour is scheduled to release weekly jobless claims data which is anticipated to register a slight increase from the previous week. Apart from this, a couple of Fed officials are set to deliver speeches later in the session. Amid a data light session today, market participants will keep an eye on the nation’s export and import price indices for January along with monthly budget statement for the same month, slated to release tomorrow. Additionally, flash estimate of the Michigan consumer sentiment index for February will be on traders’ radar and is expected to post a decline from its prior reading.
Yesterday, the greenback ended weaker across the board. However, the losses were kept in check as political uncertainty in the Eurozone continued to dominate market sentiment. Macroeconomic data showed that US mortgage application volumes ticked back up in the past week.
Euro – European Markets
This morning, the Euro has extended its losses against the Pound. Data released earlier in the session showed that German trade surplus narrowed more than anticipated for December, as exports retreated while imports remained flat. Nevertheless, for 2016 as a whole, German trade surplus rose to a record high, buoyed by robust exports, thanks to stronger demand from other European Union countries. Moving forward, with no major economic releases scheduled ahead in the day, investors will focus on French and Italian industrial output data, due tomorrow. Both the data prints are expected to register a decline in December.
Yesterday, the shared currency ended lower against the Pound, amid political uncertainty in the Eurozone. Three months before the final round of French presidential elections, investors are concerned about the strong showing of far-right candidate Marine Le Pen, who has promised to take France out of the Eurozone. Several other front runners are in disarray. On the data front, Spanish industrial production grew at a slower than estimated pace in December.
Other Currencies – Highlights
The Kiwi Dollar is trading lower against its US counterpart this morning, after the Reserve Bank of New Zealand (RBNZ) held the official cash rate on hold at 1.75%, but delivered an overall rhetoric that was slightly more dovish than expected, especially with further warnings that the nation’s exchange rate is too strong. The word “uncertainty” featured prominently in the central bank’s monetary policy statement. The RBNZ Governor, Graeme Wheeler, acknowledged the fact that New Zealand economy has been growing strongly, driven by strong immigration and recovering dairy prices. However, he stated that monetary policy will continue to remain accommodative for a considerable period quoting uncertain global outlook.
On the economic data front, figures from Statistics New Zealand showed that the total number of building permits issued decreased for the second successive month in December. Separately, the nation’s
near-term inflation expectations rose in the first quarter and global dairy product prices jumped at the latest Global Dairy Trade auction, as both whole and skimmed milk powder prices increased.